The Centers for Medicare & Medicaid Services has resumed the risk adjustment payment program from calendar year 2017 and is taking steps to ensure the program’s operation for 2018 and beyond.
CMS posted a final rule on July 24 that reissues, with additional explanation, the risk adjustment methodology that was used to calculate payments made to insurers for 2017.
The risk adjustment payment program uses statewide average premiums to draw money from health insurance plans within a state that have low levels of high-need patients and funnels that money to plans in that state with high amounts of high-need patients as a way to minimize adverse selection and to spread risk.
CMS halted the risk adjustment program earlier in the month following legal action. In January 2018, the U.S. District Court for the District of Massachusetts ruled that the CMS was acting within its authority in promulgating its methodology based on statewide average premiums. A month later, the U.S. District Court for the District of New Mexico ruled that the methodology was invalid and barred the CMS from collecting or making payments, which prompted the agency to temporarily halt the program.
“This final rule will restore operation of the risk adjustment program and mitigate some of the uncertainty caused by the New Mexico litigation,” CMS Administrator Seema Verma said in a statement. “Issuers that had expressed concern about having to withdraw from markets or becoming insolvent should be assured by our actions today.”
CMS said the final rule provides a fuller explanation to support the 2017 risk adjustment methodology. The agency dispensed with the normal notice and comment period before issuing the final rule to help ensure timely payments are made by the program while working to resolve the legal questions. A motion to reconsider was filed in New Mexico on June 21, but a ruling on that is not expected until early September, which prompted the unusual move to issue a final rule without any notice or comment period.
CMS added that there will be a notice of proposed rule making with the normal comment period related to the risk adjustment payments for the 2018 calendar year. The existing rule was also vacated by the New Mexico court. The risk adjustment methodology for 2019 and beyond was finalized in a rule issued on April 17.